A missed PR opportunity

Tuesday, July 26, 2011

Big airlines pocketing fed ticket tax windfall

A partial shutdown of the Federal Aviation Administratison due to a funding stalemate in Congress has halted airport construction projects around the country, directly affecting some 4,000 employees in 35 states.

Thankfully, the safety of airline passengers isn't being compromised since air controllers and those who inspect the safety of planes are not among the furloughed workers.

That's good news for the flying public. What is less than commendable is that major airlines are enjoying a windfall due to the federal taxes placed on airline tickets that expired last weekend when Congress failed to pass the FAA legislation. It's estimated that the taxes total $200 million a week.

Consumers, however, are not seeing a dime of that money reflected in lower ticket prices. Instead, the major airlines raised their fares an equal amount and pocketed the money from the ticket tax themselves. A few of the smaller airlines which had considered passing the savings on to passengers apparently changed their minds to remain "competitive" with the other carriers.

It's true that the tax money windfall helps airlines recover some of the money expanded for higher fuel prices, but it's not like they haven't been trying to recoup the losses at the consumers' expense. In recent months, the flying public has been saddled with additional baggage fees and other services once considered airlines courtesies.

US Airways and American Airlines were the first to raise fares and pocket the tax money and they were quickly joined by Continental, Delta, Southwest, AirTran, JetBlue and United. As of Monday, only Alaska Airlines, Spirit Airlines and Hawaiian Airlines have not raised fares.

Airlines are in a competitive business and it's somewhat surprising that none of the larger carriers didn't decide to pass on the tax savings profits to passengers. The bragging rights alone over the competition would be a public relations bonanza.